Intuit's Well-Stocked Shelf

What's Intuit up to? It looks like something big. In the last two months, the company has filed shelf registrations with the SEC for nearly $2 billion in securities. Shelf registrations don’t necessarily mean a company is about to issue all that stock at once. But you have to wonder.

The one that is really catching competitors’ eyes is a $925 million stock registration in late December that specifies that the proceeds are to be used to acquire assets or companies. Naturally, there’s little more detail and we aren’t going to get much unless the stock is issued. But just remember, the last time Intuit registered a lot of stock, it raised $400 million to purchase Lacerte. Some observers at the time thought it was a pretty high price. But if a company’s stock appreciates, as Intuit’s did at the time, it’s a pretty cheap deal since the $400 million in cash wasn’t in Intuit’s money.

The second shelf registration, filed in January for $1 billion, is more complex. It includes $500 million in stock that was previously registered early in 2001, and it also includes some senior debt. The company says that this is a routine updating of the prior registration. Acquisitions are mentioned, but so are general corporate purposes and other uses. Well, maybe this is a making a big deal over nothing and both offerings are routine. Companies routinely file registrations for debt issues that they don't use and open lines of credit that aren't drawn down. But you have to wonder.

Since Intuit was on a buying binge last year, it’s an interesting move. To recap, it acquired American Fundware, which makes the FundWare line of not-for-profit accounting software, OmWare, the company that made Master Builder, MRI, which makes property management software, and Eclipse, which made high-priced ERP packages. It also acquired Blue Ocean, which didn’t seem to fit the pattern in any of the earlier purposes.

So what’s up this time? The company looks like it might need to buy a mid-market accounting vendor. But it’s hard to think who might be for sale that would be worth anything, except Accpac, which has an IPO in the works, or Softline with AccountMate and BusinessVision, or maybe Exact Software. None of these folks look worth $1 billion. It’s possible to imagine Microsoft getting tired of losing money with Great Plains and Navision, but not yet. Microsoft spent $1.2 billion and $1.3 billion respectively for those companies and you have to think their value is down. Sage with more than $800 million in sales and profitable to boot would probably be too expensive and hard to envision for sale.

That leaves the CPA side where Best Software bought CPASoftware last year.

To be serious in the CPA market, a research arm would be a nice thing to have.

There’s only one company that seems to be worth anything like $925 million—BNA Tax Management. Thomson Corp. reportedly offered $1 billion a few years ago, but was rebuffed by the employee owners. You’d have to think that in the current economic climate, with the merger and acquisition glut over and the stock market about as much fun as a hike in the Iraqi desert, that the price would have dropped.

Would Intuit make a bunch of purchases? Maybe. It’s easy to make the case for picking up some quality, but unknown vertical companies, and it just took a minority position in the developer that makes its POS software. But those kinds of deals aren’t going to burn $1 billion. Maybe mom and dad are right.

Maybe they shouldn’t spend it in one place. But it’ll be more fun if they do.